Risk control key to underinsurance

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Better flood risk management could mitigate the problem of low income households not buying contents...

Better flood risk management could mitigate the problem of low income households not buying contents insurance, the Association of British Insurers has said.

Speaking in advance of a report on the coastal effect of climate change - for example, damages occurring from an East coast storm surge similar to that of 1953 - the ABI's head of household and property, Jane Milne, said: "Adaptation is the only response available for the impacts that will occur over the next several decades before mitigation measures can have an effect."

She added: "Government chief economist Nick Stern recognises that we are locked into continuing climate change for another half century, regardless of the measures we take now to minimise further effects."

Ms Milne argued that the ABI has been making these points (see box) for some years already. "We hope to see Sir Nick's advice translated into action through the ongoing comprehensive spending review, which will determine public spending plans over the next few years."

She continued: "We are calling for a 10% uplift, year-on-year, in flood and coastal defence funding to take us to £750m per annum by 2011. This will effectively restore the real terms cut that will occur in the government's projected spend since 2005.

"We are concerned that low-income households face particular difficulties with 50% of those in the lowest income group not purchasing household contents cover, largely because their budgets don't stretch to it. Better risk management could help improve the affordability of this cover."

EFFECTIVE ADAPTATION POLICY FRAMEWORK

High quality climate information and tools for risk management will help to drive efficient markets.

Land use and performance standards should encourage private and public investment in buildings and other long-standing infrastructure to take account of climate change.

Governments can contribute through long-term policies for climate-sensitive public goods, including coastal protection and emergency preparedness.

A financial safety net may be required for the poorest in society, who are likely to be the most vulnerable to the impacts and least able to afford protection - including insurance.

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